Weekly Updates 26/6/23 – 30/6/23 June 26, 2023
This weekly update is designed to help you stay informed and relate economic and company earnings to potentially value-add your CFD (Contract For Difference) trading via hedging (risk reducing). This article should be used for educational purposes only and not as financial advice. We urge all traders to carry out your own due diligence before submitting trades.
Recap for last week (19 June 2023 – 23 June 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s market action revolves around the Fed’s more hawkish tone with Jerome Powell signaling that rates will be higher for longer until inflation is under control. Market participants have been pricing in optimism and good news coming out of China, however Fed’s hawkish tone caused both the US and HK markets to lose from 2%-10% of its value.
Updates for the week (26 June 2023 – 30 June 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news mainly focuses on the housing data, GDP data and sentiment data from the US, while China’s manufacturing data will give market participants more confirmation on the Post-Covid recovery of China. Analysts expect the GDP of the US to hold steady at ~1.4% for the recent quarter. With personal spending to increase only at 0.2%, a potential worrying sign as the US economy is a consumption driven economy.
This week’s corporate earnings releases focus on Micron the chip manufacturer and retail giants like Nike, Mccormick and Constellation Brands. Market participants are looking closely to forward guidance given by companies and adjusting their expectations. Carnival Corp has seen an impressive 98% gain Year to Date so far, with so much gains, investors have high expectations on upcoming earnings as well as forward guidance.
If you hold equity positions in these stocks, you can hedge your positions using CFDs to mitigate the risk of disappointing earnings releases.
For those looking to speculate or capitalize on the increased volatility, CFDs provide leverage and ease of going long and short across a broad range of products available.
China A50 Index: Trading Opportunity – by Jun Yuan
Trade Set-up:
- China A50 Index had been in a downward channel and is approaching the support at the middle of the channel.
Trade Execution:
- Bear can take an entry when it break down the middle support of the downtrend channel with a stop-loss order slightly above the top of the channel of 12,900.
- Bear can exit and take profits at the bottom of the channel near 11,860.
- However, Bull can place a trade when a bullish candlestick is form at the middle support of the downtrend channel with a stop-loss when it break the recent low of 12,250.
- Bull can exit and take profits at the top of the channel near 12,820.
USD/JPY eases after refreshing yearly top above 143.00
Trade Set-up:
- USD/JPY spot prices trade just below the 143.50 mark on closing last week and seem poised to prolong the recent well-established bullish trajectory witnessed after the double bottom and bullish SMA crossover identified by our weekly updates at the start of May.
- However, signs of exhaustion and talks of BOJ stealth intervention on JPY weakness appears to cap USD/JPY’s moves within the Resistance zone. Further upside in the USD Index is still favored as the Fed is consistently reiterating the need for more rate hikes. Reuters reported that Japan’s government and the BOJ will act to stop the yen’s decline if it depreciates to the 145 per U.S. dollar level.
- From a technical perspective, a breakout above 143.50 could spark the pair’s move to the 145.30 level. This will coincide with the top-side of the rising channel (highlighted in the charts).
Trade Execution:
- Technically, the pair is considered on an uptrend and the fundamental factors favouring the USD remains intact. The USD/JPY is likely to consolidate in the early part of the week before a breakout to the topside. Traders could look for “break-out” plays i.e. to buy when prices break-out above 143.50 for a move to 145.30.
- Traders who are already in positions could adjust their stops to the 142 handle and await any breakout to the top-side. Should the USD/JPY fail to emerge higher, the pair is likely to consolidate down to the SMA20 level.
If you have any feedback or questions, feel free to email us at samht@phillip.com.sg or onishathyeyn@phillip.com.sg or cfd@phillip.com.sg.
Disclaimer
This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs.
Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks.
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About the author
Sam Hei Tung (Dealing) and Onisha Thye (Dealing)
Sam graduated from National University of Singapore with a Master of Science in Finance. He personally manages his own investment portfolio and does equity and economic research in his free time. Sam believes that education and information is essential to making good financial decisions.
Onisha is a dealer at the CFD Dealing Desk. She graduated from Monash University with a double major in finance and econometrics. Her natural curiosity for finance is what drove her to be in this field as she is fascinated by all the possibilities and opportunities that are available to grow one’s wealth, either through trading or investment.
